The 1980 United Nations Convention on Contracts for the International Sale of Goods

Article 58

243. The buyer is obligated to pay at the time designated in the contract.[l] For cases where the contract is silent, Article 58(1) provides the general gap-filling rule:

'If the buyer is not bound to pay the price at any other specific time, he must pay it
when the seller places either the goods or documents controlling their disposition at the
buyer's disposal in accordance with the contract and this Convention. The seller may
make such payment a condition for handing over the goods or documents.'

245. In an international sales context, the contract will ordinarily involve carriage of the
goods.[1] For these cases, where the parties deal at a distance, Article 58(2) provides the
necessary modification to the 'construction conditions concurrent' rule in paragraph (1):

'If the contract involves carriage of the goods, the seller may dispatch the goods on
terms whereby the goods, or documents controlling their disposition, will not be handed
over to the buyer except against payment of the price.'

Where the contract involves 'carriage' (by an independent carrier), Article 58(2) permits the
seller to protect its interests while proceeding to dispatch the goods: absent contrary
contractual provision, and at seller's election, the terms of carriage may provide that an
exchange of goods (or documents) against payment will take place when the goods are
handed over to the buyer.

246. Article 58 deals with the time, not the place for exchange. In the paragraph (2) situation, when the seller elects to ship under terms whereby the goods (or documents) are
to be handed over to the buyer against payment, the CISG default rule calls for payment to
be made where the handing over takes place.[1] On the other hand, the seller may not wish to
ship under such terms without some assurance that the ultimate exchange will proceed as
planned.[2] In practice, the contract will often require the buyer to arrange for the issuance of
a letter of credit in the seller's favour; in this case, payment will be made - in exchange for
documents - in the seller's locale, by the local (confirming) bank concerned.[3]

247. The buyer has no obligation to make (full) payment for goods which do not conform
to the contract.[l] Before making payment, and before accepting delivery, the buyer is entitled
(though not obligated) to examine the goods.[2] Article 58(3) provides:

'The buyer is not bound to pay the price until he has had an opportunity to examine the
goods, unless the procedures for delivery or payment agreed upon by the parties are
inconsistent with his having such an opportunity.' [page 132]

In the Article 58(2) situation, when the seller elects to ship under terms whereby the goods (or
documents) are to be handed over to the buyer against payment, the seller must preserve the
buyer's right to inspect, e.g., by arranging for buyer's access to the goods at the point of
destination.

The right of inspection under Article 58(3) is only a gap-filling rule, so (it goes without
saying that) the buyer has no right to inspect if the parties agree on other delivery or payment
procedures. The quotation of the price on CIF terms is a common example of an agreement
inconsistent with inspection prior to payment.[3]